Faced With Rampant Inflation, Argentines Turn to Barter

Instead of selling his soybeans for devalued pesos, Gustavo Tione exchanged 30 tons of soy for about 8,000 liters of diesel from the state-run oil company. This is just one example of a growing barter economy in Argentina as a 24% inflation rate rapidly erodes the value of the country’s currency.
As Bloomberg reports, the rise of barter is simple economics. Commodities hold their value better than than cash.
So, why bother with fiat currency if you don’t have to?
Barter is the most basic economic transaction. You give me something I want or need. In exchange, I give you something you want or need.
YPF, the Argentine energy company, uses barter to bypass the peso. The company barters with farmers, trading fuel for wheat, soy, and corn, and then sells it on the dollar-based export market for grain. Of course, this scheme will fall apart if the dollar crashes. Nevertheless, it illustrates the power of barter.

This post was published at Schiffgold on JULY 12, 2017.